ci

A FEASIBILITY STUDY OF ESTABLISHING A

SOFT SERVE ICE CREAM SHOP
IN HAGERSTOWN'S NORTH END

IN PARTIAL FULFILLMENT OF THE

REQUIREMENTS FOR
MBA 599 INDEPENDENT RESEARCH

EDWARD INGRAM
AUGUST 23, 1988

TABLE OF CONTENTS

. . . . . . . . .
Product . . . . . . . . . . . .
Market
............
Business Design . . . . . . .
Insurance . . . . . . . . . . .
Introduction

.
.
.
.
.

. . . . . . . . .
........
........
. . . . . . . . .
........

. . . . . . . . . . . . . . . . . .
Advertising . . . . . . . . . . . . . . . . . .
Financial . . . . . . . . . . . . . . . . . . . .
Conclusions . . . . . . . . . . . . . . . . . .
Exhibits . . . . . . . . . . . . . . . . . . . . .
Notes . . . . . . . . . . . . . . . . . . . . . .
Bibliography . . . . . . . . . . . . . . . . . .
Regulations

.
.

3
5

12
13
15

17

20

21
38

39

INTRODUCTION
The peerless sensation of something icy and flavorful
melting on the tongue is not new to the world's food lovers.
A delicacy once reserved for nobility, American's eat more
than 800 million gallondof ice cream each year.

Moreover,

Gourmet calls ice cream "America's favorite dessertii.2

It is not difficult to understand the worldis passion
for ice cream.

Aside from the obvious pleasure of satis-

fying ones own taste buds, almost everyone has a fond memory of a Birthday party, picnic or romance which included
some form of ice cream.
Another American passion is the dream of owning ones
own business.

Having the ability of setting ones own pri-

orities in life, controlling ones own destiny, being independent from direct supervision and receiving profits from
ones own labors are a few of the rationales for this dream.
This research paper unites these two passions; the
love for ice cream and the dream of owning ones own business.

Moreover, it is a feasibility study for opening a

soft serve ice cream parlor near the north end of Hagerstown,
Maryland.
This feasibility study describes the product which the
ice cream parlor will offer to the public.
1

The study defines

'

the target market and describes the business design; presents

insurance needs and. various regulations facing the business;
and describes an advertising plan and evaluates the potential
profitability of the ice cream parlor.

PRODUCT

The primary product of the restaurant will be soft serve

ice cream offered in two flavors: vanilla and chocolate.

How-

ever, the primary product will be offered in many variations.

(Exhibit 1).
First, the menu will offer the traditional ice cream
served in a cone or cup either plain or coated with chocolate.
Also, the traditional thick shake will be offered in three
flavors: vanilla, chocolate and strawberry.
Another favorite to be served will be the old fashioned
sundae with a choice of chocolate, hot fudge, pineapple, strawberry, marshmallow or butterscotch toppings.

In addition, the

parlor will offer ice cream floats.

Moreover, the parlor will present an ostentatious presentation of specialty desserts.

The banana split will feature

three heaping mounds of ice cream, three toppings, banana and

whipped cream, topped with a cherry.

Another treat featuring

a moist brownie with a generous portion of ice cream and hot

fudge will also be on the menu.

Two other items on the menu

will be an old fashioned strawberry shortcake dessert and the

ever popular parfait.

Taking advantage of seasonal items,

special desserts will be featured which w i l l center around

a particular fresh fruit.
3

--

The innovative side of the menu will include candied

shakes and sundaes which combine the cool creamy texture
of ice cream with the customers favorite candy bar or

candy.

In addition, the parlor will offer two sizes of

ice cream cakes.

Soft drinks will be the parlors secondary product.
The drink menu will include Coca Cola, Diet Coke, Sprite,
and Root Beer.
An important factor in the success of the restaurant
is the atmosphere.
part of the product.

The atmosphere of the parlor will be

Customers will be greeted with

friendly, courteous and efficient employees and the phys-

c'

ical building itself will be kept clean and orderly both

inside and outside.

MARKET
Markets consist of buyers which differ in one or more
respects.

They may differ in their wants, resources, buy-

ing practices, buying attitudes or geographical location.

Any of these variables can be used to segment an entrepreneur's market.
Since ice cream is liked by almost all American's
regardless of age, race or social status, the most logical
method of market segmentation is by geographical location.
For presentation purposes, the geographical location of the
target market for the proposed ice cream restaurant can
be defined as Election Districts 13,27,25, and 21 (Exhibit
#2) or the north and northwestern sections of Hagerstown
and the northern and northwestern parts of Washington County
which are adjacent to the City of Hagerstown.

This geograph-

ical area has approximately 21,000 residents of which 26%

are less than 18 years of age, 57% are between the ages of

18 and 62 and 17% are older than 62 years of age.3

The proposed location for the soft serve ice cream
parlor is in a shopping center currently being constructed
at a location one half of a mile North of Hagerstown, Maryland
on Route 11 (Exhibit #3).

According to the developer, Office

Suppliers Inc., the shopping center will be completed by early

5

spring and will include a large supermarket and eight retail

spaces of approximately 7 5 0 square feet each.
there will be ample parking for the center.

In addition,
Access in an6

out of the shopping center is already controlled by a traffic

light.

Beyond this, the developer was unable to give any

additional information.
The projected growth of the proposed market is extremely
promising.

According to records at the Washington County

Planning and Zoning Commission, there are six new housing

developments already approved (Exhibit # a ) .

In the Maug-

ansville area there are 2 3 single family homes and 40 multifamily homes approved for development.

Slightly northeast

of the proposed location are three areas approved for development:

Forest Hills, Fairgreen Acres, and Fountain Head Meadows.

The Forest Hill and Fountain Head Meadows housing developments

have been approved for 7 0 and 29 (respectively) single family
homes.

Fairgreen Acres was approved to contain 20 single

family and 29 multi-family housing units.

One half of a

mile southeast of these developments is another mass of land

called Orchard

Grove which has been approved for 255 single

family homes. Immediately southwest of this area is Fountain

Head Extended which was approved for 18 single family housing

jl

! I

units.
Combined, these six developments increase the housing

I1
I

units of the proposed market by 4 1 5 single family and 69 multi-

(-:
'L

family housing units.

Currently development has begun in

four of the six proposed sites and development of the remaining two areas is scheduled to begin by the end of the 1 9 8 8
calendar year.
In April of 1 9 8 8 a developer showed the Planning and
Zoning Commission of Hagerstown his plans for a 40 acre
tract of land on Route 11 within city limits.

His plans

include a massive development of 2 8 0 tounhornes and 8 0

apartments.
According to the 1 9 8 5 State of Maryland Traffic Volume
Map, the proposed location on Route 11 has a daily traffic
count of 16,600 vehicles (Exhibit # 5 ) .

Therefore, this

good traffic count coupled with any shopping mall traffic

should make for an excellent location.

In addition, the

proposed location is centrally located in the target market.

Route 11 from Maugans Avenue into the City of Hagerstown
has various small businesses and industries and a large Mack
Trucks Inc. plant adjacent to the proposed location which
employs approximately 2,200 people4.

Behind the various

businesses on either side of Route 11 are housing developments.

Competition for the proposed ice cream parlor is n o t
strong- (Exhibit #6).

On Route 11, adjacent to the proposed

location is Olympia Candy Kitchen which serves a homemade

style hand-dipped ice cream.

Their prices tend to be very

expensive with one scoop of ice cream costing the customer

$1.25.

Another competitor is Long Meadow Ice Cream which

is located in the Long Meadow Shopping Center, one and one

half miles southeast of the proposed location.

Although

Long Meadow Ice Cream's concentration is on ice cream

alone, they serve only hand-dipped and are expensive.
Franchises such as McDonald's and Hardee's each have a
location in the proposed market.
variations of soft ice cream.

Both serve limited

One quarter of a mile

north of the shopping center is a small diner which also

serves soft ice cream with little diversification.
Outside the proposed market are two soft ice cream
shops very similar to the proposed parlor. Dairy Queen,
an international franchise, is located on Route 40, southeast of Hagerstown.

The other ice cream restaurant, Big

Dipper Drive-In, is located on Route 11 south of Hagerstown.

Dairy Queen will probably be an indirect competitor because
of advertising support from the franchise,however,both
competitors are inconveniently located.

BUSINESS DESIGN
Available to the entrepreneur are three basic forms of
ownership:

Proprietorship, Partnership and Corporation.

The

most appropriate form of ownership is determined by weighing

the advantages and disadvantages of each type of ownership
against the requirements of the business.
A proprietorship is a business owned and controlled. by
one individual who takes all the risks and receives any profits
It is the most popular business form and is commonly found. in
retailing and personal services.

The advantages of a propri-

etorship include ease of formation, freedom and mawinurn incentive.

Disadvantages include unlimited liability, limited

life and limited funds.

Partnerships are the least favorite form of business
organizations.

As the title implies, they are an association

of two or more persons as co-owners of a business.

Partner-

ships are commonly found in retail and personal service

indu.stries. Significant advantages include having more
funds for expansion and improved credit rating.

DisaGvantages

are unlimited liability, divided authority and frozen investment.

Corporations are the most complicated form of business.

10

A corporation is a legal entity created by law which exists

apart from its owners. The major advantages of corporations
are limited liability, ease of transferring ownership, continuous life and ease of raising funds.

Disadvantages in-

clude double taxation, expense and difficulty of organization and government regulations.
Probably the best form of organization for the small
ice cream parlor is a proprietorship.

Although corporations

enjoy limited liability, the lengthy and expensive process

of incorporation is probably best suited for a larger business with additional start up cash.

Also, the entrepreneur

in a small business such as the ice cream parlor would probably want to maintain the authority rather that share it
with a partner.
Personnel needed for the ice cream parlor would. vary
according to the season.

Restaurants typically utilize

both part-time employees and high school students because

they will work for a lower hourly rate.

Aside from a full-

time manager, year-round, the parlor will probably need a

staff of 13 employees during the summer and 5 employees
during the winter months working approximately 20 hours
per week (Exhibit # 7 ) .
Since students can not work daytime hours during the
school year, the entrepreneur should try to secure approximately three employees capable of working daytime hours
during the winter months.

A job title of "Senior Employeell

ll
can be given to this category of employee to justify the
higher rate needed to secure these people.

The manager

will probably need to pay "Senior Employees" a rate of

$3.75 per hour.

The other part-time employees can be

hired at the minimum wage of $3.35 per hour.

Restaurants

typically have a high employee turnover, therefore, the

manager should maintain a good employment application
file.

INSURANCE
By law, if a person has employees, they must carry
Workmen's Compensation insurance.

Workmen's Compensation

provides medical insurance for all employees while they

are on the job.

If an employee is injured while on the

job, all medical costs will be covered by the employer's

Workmen's Compensation insurance.

The cost of the insur-

ance is determined by the type of work.

The expense to

the employer is between $ .41 and $6.00 per hundred

dollars of payroll5.

The rates are regulated by the State,

therefore, all insurance companies will charge the same.

A comprehensive insurance policy is called a multiperil policy which contains two parts:
liability.

property and

The property coverage will explain all condi-

tions and stipulations in the event of physical damage to

the business.

The liability coverage will insure against

three conditions:
(not including

criminal behavior against the insured

customer and employee theft), legal respons-

ibility by a contract which harms the insured and tort liability which covers harm due to negligence.

An adequate

multi-peril policy can be bought for the ice cream parlor

for approximately $ 6 0 0 . 0 0 6 .

12

REGULATIONS
One of the major obstacles of opening the ice cream
parlor is getting beyond the regulations of the Health
Department.

Two pamphlets are published which outline

the requirements for this type of business: 10.15.03

Food Service Facilities and 10.15.05 Manufacture and
Sale of Frozen Dairy Foods and Ices.
According to Health Department Regulations, prior

to opening, the business must submit a "finishing" schedule which outlines the materials which will be used to
finish the walls, ceilings and floors.

The materials

used must be smooth and easy to clean.

A list of food

service equipment must be submitted including the manufacturer, model number and a descriptive pamphlet for
each piece.

Per the regulations, the business must sub-

mit a detailed floor plan showing where every item is

located in the building.

The plumbing layout must be

inspected and if city water and sewer are not used, then
there must be approval.

A three compartment sink (wash,

rinse, sanitize) must be installed.

In addition, the

business must apply for a license yearly and agree to

be inspected by the Health Department twice a year.
13

,--.

14
c-

A traders license must also be bought on a yearly

basis from the Clerk of the County Court or $ 2 5 . 0 0 7 .

The Milk Control Board. must also issue a license
for a fee of $ 2 5 . 0 0 8 per year and must test the ice cream
machine once a month for bacteria levels.

The lab fee

for this test is $31.009 monthly.

In order to collect revenues, the business must
register with the State of Maryland to collect sales
tax.

After a simple form is sent with a $ 2 5 . Q 0 1 0

fee,

the operator will receive a Sta-te registration certificate with an identification number and forms to include
with sales tax collections.

Sales tax is payable monthly.

F--

.-

The ice cream parlor will need to register with the

City and County in which it resides in order to receive
an occupancy license.
newable yearly.

The fee is $30.0011

and is re-

A federal tax identification number is

needed to comply with tax regulations involving F.I.C.A.

and federal income tax withholding procedures.

..-.

ADVERTISING
The ice cream parlor's most important advertising
objective will be to inform customers of its existence.
Two types of customers must be informed; those who live
in the target market and those who will be traveling
through the target market.

For the money, the best

method of reaching both markets is by newspaper.

A newspaper is the primary advertising medium in
terms of daily readership, advertising revenue and
preference as an advertising medium by the public.
Moreover, newspaper readership is a daily ritual in
most homes.

The newspaper offers everyone something:

whether it be current events, sports, comics, entertainment, financial or shopping information.

One of the

greatest advantages of newspaper is that all of these

can be described and illustrated. to the reader.

From

line ads in classified to full page ads - the reader

can find it all in one place.
The Herald-Mail newspapers are the major newspapers
in Washington County, publishing both a morning- and evening
edition.

These newspapers have a combined daily circula-

tion of 44,00012. The circulation area includes Washington

15

16

and Frederick Counties in Maryland, Franklin and Fulton

Counties in Pennsylvania, and Jefferson, Berkeley and
Morgan Counties in West Virginia.
Advertising in the Hagerstown newspapers seems a
logical choice because it not only is the primary newspaper for the customers living in the target market, it
also reaches many of the potential customers who travel
to and/or by the shopping center.
The newspaper advertising budget for the first year
allocates funds for promoting a grand opening and funds
for advertising the business continuously throughout the
year.

A display advertisement, 2 columns by 7 inches

(Exhibit # 8 ) ,

will be published in the newspapers on the

Wednesday and Friday prior to the grand opening and will

also appear on the Sunday of the grand opening.

Also

budgeted for the grand opening is a 1 column by 3 inch

back page advertisement (Exhibit #9) which is scheduled to
be published on the Sunday, Wednesday and Friday prior to
the grand opening.

These particular days were chosen be-

cause they are promoted by the Herald-Mail as the best

advertising days.

The money budgeted for the rest of the

year is for one back page advertisement per week. Since

Wednesday is the largest advertising day of the week and
the circulation is the greatest, nearly 46,00013, it would
be the best day of the week for the greatest exposure.

FINANCIAL INFORMATION
The sales forecast is comprised of an estimate for
the summer season (June through August) (Exhibit

#lo),

and an estimate for the winter season (September through

May) (Exhibit #11).

Within each season a projection is

some for purchasing service minutes (PSM).

The PSM are

divided by an estimated time it takes to wait on a customer (two and one half minutes) to produce the number of
purchasing customers distinguished by purchasing type
(A = small purchase; B = large purchases).
An ice cream sale projection is calculated by
multiplying the estimated number of purchasing customers
by the average sale

per customer for each customer type.

The soda projection is based on an assumption that one

out of every ten customers will purchase a soda.

Cake

sales are estimated at two per day in the winter and

ten per day in the summer.
Sales are allocated to each item on the menu to
derive an estimated number of sales units f o r each item
(Exhibit 12).

A cost of goods sold estimate was then

derived by multiplying the sales units times the medium

cost (Exhibit # 1 2 - A ) .
17

ia
According to the projected Income Statement, (Exhibit
#13), the ice cream parlor will lose more than $34,000.00

the first year.

#14),

Reviewing the operating expenses (Exhibit

an obvious problem is the rental expense and the

associated fees of the shopping center.

Combined, these

expenses account for 64% of the operating expenses.

Moreover, the Income Statement presents an optimistic
presentation.

Negative variations in the sales forecast

would increase the loss to even greater proportions.

Also,

the cost of goods sold estimates assume the ice cream machine
can produce the product for $ .07 per ounce.

Salesman for

the machines estimates a range of $ .07 to $ . 1 0 per ounce.

Currently the prices are identical to the competitors
outside the market.

Pricing for the soft ice cream tends

to be very elastic, therefore, increasing prices will sacrifice sales on an already marginal gross profit margin.

In

order for the restaurant to break even using the current

financial estimates, the entrepreneur would need. to increase the price of each ice cream product by $ . 1 5 .
The Balance Sheet (Exhibit #13) for the ice cream
parlor assumes the entrepreneur has working capital of
approximately $77,000.00 to purchase equipment, leasehold
improvements and to contribute to working capital.

There

are places in the equipment purchases (Exhibit #16) where

money can be saved.

Eliminating seating in the ice cream

parlor would save $1000.00. There are less expensive models

-I-

----

19

of ice cream makers which could save as much as $3,000.00,

however, they d o not have the same cost of goods profitability

A current ratio of 1 : l is very good for an ice cream

parlor.

However, this good ratio is caused by the assump-

tion the entrepreneur needed no financing for the endeavor.

..L_

,-.,

...

CONCLUSIONS
The ice cream parlor is not feasible as proposed.
An optimistic projection of revenues nets to a loss of
almost $31,000.00 on the Income Statement.

Moreover,

cost of goods sold may be understated by as much as

$ .03 on 242,220 ice cream prod-ucts or possibly $22,000.

Also, the depreciation on the equipment was calculated

on a 10 year straight line method to produce a more
profitable number.

The depreciation should probably

be calculated on a five year accelerated method which

would increase the net loss.
An alternative for the restaurant would be to
offer food items.

Currently, Dairy Queen does not

offer stores to prospective franchisees which feature

only ice cream.

Instead, they offer the franchisee a

Dairy Queen/Brazier

plan which is a total food service

program with a line of soft serve dairy products and

fast foods.

It appears the gross profit margin for soft

serve dairy products is not sufficient to cover the cost

of leasing space.

20

21

EXHIBIT 1
MENU
Customer Type
A
B
.20
.10
.20
.10
.10
.04
.04
.04
.03
.04
.08
.03

.13
.05
.05
.12
.05
.08
.08
.08
.06
.08
.16
.06

Item
Cones
Cones Dipped
Sundae
Shakes
Floats
Banana Split
Brownie Dessert
Strawberry Shortcake
O l d Fashion Soda
Parfait
Candy Shake
Candy Sundae
Cakes
Soft Drinks

Price
.70
.85
1.15
1.20
1.20
1.70
1.70

.60
.75
1.05
1.05
1.05

.45
.60
.80
.95
.95

1.80
1.50

1.35
1.25

8.50
.60

.50

1.70
1.70
1.50
2.25
1.85
11.50

I
-

70

22

8-

'..-

t----

23

EXHIBIT 3
:k

Proposed Location

24

EXHIBIT 4

Additional Housing

Planned
Approved

26
EXHIBIT 6
COMPETITION

27

EXHIBIT 7
Work Hours Paid.
Winter
1
1
1
1
1
1
-1

D
A

1
1
1
1
1
2
2

1
1
1
1
1
2
2

1
1
1
1
1
2
2

Time
1
1
1
1
1
1
1
1
2
2

1
1
2
2

1
1
1
1
2
2
2

1
1
1
1
2
2
2

1
1
1
1
2
2
2

1
1
1
1
1
1
1

2
2
2
2
2
3
5

3
3
3
3
3
3
5

3
3
3
3
3
3
5

3
3
3
3
3
3
5

3
3
3
3
4
5
5

Total Hrs.
10
10
10
10
13
18
18
89
5 Employees

Summer

D
A
Y

M
T
W
T
F
S
S

2
2
2
2
2
2
2

2
2
2
2
2
3
3

3
3
3
3
3
3
3

3
3
3
3
3
3
3

Time
2
2
2
2
2
3
5

3
3
3
3
4
5
5

2
2
2
2
4
5
3

x
x
x
x
3
3
x

13 Employees
Winter: 3 @ $ 3 . 7 5 x 2280 hrs = $ 8550
2 @ 3 . 3 5 x 1102
=
3692
$12242
Summer: 3 @ $ 3 . 7 5 x 840 h r s = $ 3150
9146
10 Q 3 . 3 5 x 2730 h r s =
$12296

Total
31
31
31
31
38
44
49
255

28

EXHIBIT 8
.
.
a

...I

. . . .% deep
. . . 2 deep
3 r o l ~ ., . . 3 deep
cnI

COIS

Insertior
- Cols. 3

l.( 1. H o x 439
I O 0 Summit Avenue
MI). 2 1740
:Io I /7:19-5 I.? I
Ilagt-rstown.

1 COL

2 COL

Sunday, Xxxxxxxx XX
10 AeMe 10 P e M e
XXXX Pennsylvania Avenue
000~0000
Stop By ForA Taste!

29

EXHIBIT 9

Ice Cream Shoppe

invites you to our

Grand Opening
Celebration

Sunday, Xxxxxxx XX

10 A.M. - 10 P.M.
at
XXXX Penna. Ave.
3

IBring this ad to purchase a large cone fo

the price of a medium I

3"

4g

4;

Copy Below

30

EXHIBIT 10
Summer Sales

TYPe
A
B
A
A
B
B
B
B

A
B
B
B
B
B

Period
Mon-Fri
Mon-Fri
Mon-Fri
Mon-Fri
Mon-Fri
Mon-Thu
Fri-Sat
Fri-Sat
Sat-Sun
Sat-Sun
Sat
Sat
Sun
Sun

Days
5
5
5
5
5
4
2
2
2
2
1
1
1
1

Time
Lines
10-12am
1
12- 2pm
2
2- 4pm
2
4- 6pm
2
6- 9pm
2
9-10pm
1
9-10pm
3
10-llpm
2
10-llam
1
11- 2pm
2
2- 7pm
2
7- 9pn
3
2- 9pm
3
9-1Opm
2

SM
600
1200
1200
1200
2700
240
360
240
120
720
600
360
1260
120

1 4 W k s SM

8400
16800
16800
16800
37800
3360
5040
3360
1680
10080
8400
5040
17640
1680
152880

A: 43680/2.5 = 17472 customers x $2.00 = $ 34944

B:109200/2.5 = 43680 customers x $4.00 = 174720
Total Ice Cream Sales
$209664
Soda Sales
Cake Sales

61152 customers x .1 =6115 x rf.60= $3669

980 x $10.00=$9800

;c[

31

EXHIBIT 11
Winter Sales
I
~

Type
A
B
A

B
B
B
B

Period
Mon-Thu
Mon-Thu
Fri
Fri-Sun
Fri-Sun
Sat-Sun
Sat-Sun

Days
4
4
1
3
3
2
2

Time
11- 6pm
6 - 9pm
11- 6pm
6- 8pm
8 - 9pm
12- 6pm
11-12am

Lines
1/4
1/4
1/4
1/2
1/4
1/2
1/4

A: 19950/2.5 =
7980 customers x $2.00 =
B: 30210/2.5 = 12084 customers x $4..00 =
Total Ice Cream Sales

SM
420
180
105
180
45
360
30

38 Wlcs SM
15960
6840
3990
6840
1710
13680
1140
50160

$15960
$48336
$64296

Soda: 20064 customers x .1 = 2006 x $ .60 = $ 1204

Cakes:
532 x $10.00= $ 5320

32

EXHIBIT 1 2
Cost Of Goods

Sales

Units

CGS

Item

.20
.10
.20
.10
.10
.04
.04
.04
.03
.04
.08
.03

10182
5090
10182
5090
5090
2036
2036
2036
1527
2036
4072
1527

16968
6787
9697
4848
4848
1198
1198
1198
898
1357
2262
1018

6477
3256
5366
3352
2684
1253
963
1022
483
1107
2084
869

Cones
Dip Cone
Sundae
Shakes
Floats
B. Split
Brownie
Stwb Short
Soda
Parfait
Can Shake
Can Sundae

Winter

$28916

Sales

Units

CGS

.13
.05
.05
.12
.05
.08
.08
.08
.06
.08
.16
.06

28998
11153
11153
26768
11153
17844
17844
17844
13383
17844
35689

48330
14871
10622
25493
10622
10496
10496
10496
7872
11896
19827
8922

18448
7134
5878
17626
5880
10974
8432
8957
4230
9701
18269
7614

13383
Summer

$123143

33

EXHIBIT 12 A
COST OF GOODS BY PRODUCT
Cones
Small (302)
Medium (502)
Large (802)

Ice Cream

Sundae
Small (302)
Medium(5oz)
Large (802)

Ice Cream
.2100
.3500
.5600

.2100

.3500
.5600

Cone Napkin Choc

.0220 .0020 .0600
.0297 .0020 .0800
.0316 .0020 . 0 1 0 0

cost
Plain Dip
.2340 .2940
.3817 .4797
,5936 .6936

Dish Napkin Spoon Top

.0318 .0020 .0080 . l o 0 0
.0434 .0020 .0080 .1500
.0434 .0020 .0080 . 2 0 0 0

Cost
.3518
.5534
.8134

Shakes
Ice Cr Flav Milk Cup
Napk Straw/Lid
Sm (1Ooz) _.;35OD
+ l o 0 0 .0700 ,0189 . 0 0 2 0
.0135
Md (1202)
.4200 .1500 .0840 .0210 .0020 .0144
Lg (1602)
.5600 ,2000 .1120 .0313 .0020 .0178

Cost
.5544
.6914
,9231

Floats
Ice Cr
Soda
Sm (1002)
.2100 .0500
Md (1202)
.3500 .0600
Lg (1602)
.5600 .0800

cost
.2944
.5536
-8279

Banana Split

Ice Cr
,5600

Cup
.0189
.0210
.0313

Napk Straw
.0020 .0026
.0020 .0026
.0020 .0026

Lid
.0109
.1180
.1520

Top
Bana Spoon Dish Napk
.3500 .0800 .0080 ,0455 .0020

cost
1.0455

Brownie Dessert

Ice Cr
.3500

Brown Spoon Dish Napk

Top
.1500 .2500 .0080 .0434 . 0 0 2 0

cost
-8034

Short Cake

Ice Cr
.3500

Top
Cake Spoon Dish Napk
.2000 .2500 .0080 .0434 .0020

cost
.8534

Soda

Ice CR
.2100
.3500
.5600

Flav

.1500 .0210 . 0 0 2 0 .0026 .0118

.2000 .0313 .0020 .0026 .1520

cost
.3444
.5374
.9479

Parfait

Ice Cr
.5600

Top Dish
Napk Spoon
.2000 .0455 .0020 .008

cost
.8155

Candy Shake
Sm (1002)
Md (1202)
Lg (1602)

Ice Cr
,2800
.3500
.4900

Flav Milk
,2500 .0700
.4500 .0840
.6500 .1120

Cup Napk Str/Lid Cost

.0189 .0020 .0135 .6344
.0210 .0020 ,0144 .9214
.0313 .0020 .0178 1.4399

Candy Sundae
Sm
Md

Ice Cr
.2100
.3500
.5600

Dish Napk
.0318 .0020
.0434 .0020
.0434 . 0 0 2 0

Spoon Top

Sm (1002)
Md ( 1 2 0 2 )
Lg (1602)

L9

Cakes
8 Inch
10 Inch

Ice Cr
2.1000
2.8000

Cup

Napk

Straw

Lid

. l o 0 0 ,0189 .0020 .0026 .0109

Candy
Cost
.1500 .5018
.0080 .1500 .3000 .8534
.0080 .2000 .4500 1.2634
.0080

.lo00

Center Icing Fudge Box

.3500 .2500 .2000 .0300
.5000 ,3500 .3000 .0400

cost
2.93
3.99

34

EXHIBIT 1 3
Income Statement
For Twelve Months
Sales
Ice Cream
Soft Drinks
Cakes
Total Sales

$273,960
4,873

Cost Of Goods Sold

Ice Cream
Soft Drinks
Cakes
Total Cost of Goods

$152,059
650
5,232
$ 1 5 7 I 94.1

Gross Profit

$136,012

Operating Expenses (Stmt A )

Income/Loss Before Tax

$ (34,072)

35

EXHIBIT 14
Statement A
Salaries

- Operating Expenses

- Manager
- Hourly

Rent
Employer Payroll Taxes
Advertising
Legal
Depreciation
Accounting
Repairs & Maint
Supplies
Insurance
License
Real Estate Taxes
Workmen's Comp
Association Fees
Common Area Maint
Utilites
Total Operating Expenses

$ l8,OOO
24,538
108 I 000
3 I 200
3,158

2 ,000
2 ,646
1,000
1,000
1,000
600
447
400
215
200
200
3,480
$170 I 084

36

i.

EXHIBIT 1 5
Balance Sheet
Current Assets
Cash
Inventory
Total Current Assets

$ 2,000
3 ,0 0 0
$ 5,000

Fixed Assets
Equipment
Leasehold Improvements
Total Fixed Assets

$18,125
25 000
$43 125

Total Assets

$48,125

Current Liabilities
Accounts Payable

$ 5,000

Owners Equity
Paid in Capital
Net Loss
Total Equity

$73,997
( 3 0 ; 872)
$43 125

Total Liabilities & Equity

$48,125

38

NOTES
1Cindy Mills, "The Scoop on Ice Cream", Haqerstovn
(Maryland) The Daily Mail, 13 July 1988, sec. C, p . 1.
2Joyce and Christopher Dueker, The Old Fashioned
Ice Cream Cookbook (New York: The Bobbs-Merrill Company,
Inc., 1974), 11.
3Census Population and Housinq 1980.
DC, 1980) Summary Tape File 3A.

(Washington,

4Wasl~ington County Economic Development Commission ,

Business and Industry Directory (Hagerstown, Maryland:
1988), 20.
5James W. Halloran, The Entrepreneur's Guide to
Starting a Successful Business. (Blue Ridge Summit,
Pennsylvania: TAB BOOKS Inc., 1987), 153.
6Al Twiss, interviewed by author, Frederick,
Maryland, 8 July 1988.
7Clerk for County Court House, interviewed by author,
Hagerstown, Maryland, 12 July 1988.
*Donald Hummer , interviewed by author, Greencastle
Pennsylvania, 14 July 1988.

loclerk for the Comptroller of the Treasury, interviewed by author, Hagerstown, Maryland, 19 July 1988.
11Clerk for the County Court House, interviewed by
author, Hagerstown, Maryland, 12 July 1988.
laaudit Bureau of Circulations, ABC
January 1988.

N&Tspapcr,

131bid..

---

Audit Report:

39

BIBLIOGRAPHY

Audit Bureau of Circulations, ABC Audit Report: NepTspaper,

January 1 9 8 8 .
Census of Population and Housinq, 1 9 8 0 , Washington, DC:
SUmmary Tape File 3A.
for the Comptroller Of the Treasury, Interviewed by
author, 1 9 July 1 9 8 8 .
Clerk for the County Court House, Interviewed by author,
1 2 July 1 9 8 8 .
Coltman, Michael M., Start and Run a Profitable Restaurant.
Vancouver, Canada: Self Counsel Press, 1 9 8 3 .

'C

Corley, Robert and William Robert. Principles of Business

Law. Englewood Cliffs, NJ: Prentice Hall, 1 9 8 5 .

Duelcer, Joyce and Christopher. The Old Fashioned Homemade

Ice Cream Coolcbook. New Yorlc: The Bobbs-Merrill Company,
Inc., 1 9 7 4 .
Holloran, James W. The Entrepreneur's Guide to Startinq A
Successful Business. Blue Ridge Summit, Pennsylvania;
TAB BOOKS Inc., 1 9 8 7 .
Hummer, Donald, proprietor, Antrim House Restaurant. Interviewed by author, 14 July 1 9 8 8 .
Kotler, Philip. Marketinq Manaqement. Englewood Cliffs, NJ:
Prentice Hall, 1 9 8 4 .
Mills, Cindy. "The Scoop on Ice Cream." Haqerstown (Maryland)
The Daily Mail, 13 July 1 9 8 8 .
Roberson, Cliff. The Small Business Tax Advisor. Blue Ridge
Summit, Pennsylvania: TAB BOOKS Inc., 1 9 8 7 .
Rusell, Thomas and Glenn Verrill. Otto Kleppner's Advertisinq
Procedure. Englewood Cliffs, NJ: Prentice Hall, 1 9 8 6 .

(;.,
I

Walthall, Wylie. Gettinq Into Business. San Francisco, CA:

Canfield Press, 1 9 7 5 .
Washington County Economic Development Commission. Business
and Industry Directory. Hagerstown, Maryland. 1 9 8 8 .

25

EXHIBIT 5
State Of Maryland Traffic Volume Map

40

Weaver, Linda, former owner of Long Meadow Ice Cream.

Interviewed by author, 20 J u l y 1988.